The Hindu Business Line : Posco project gets rail transportation clearance

Project proposal
The rail network for Posco is being planned mainly to transport raw materials to the plant.
RITES study is being undertaken with the assumption that Posco will have its own captive port at Paradip.

Kolkata , May 16

The Railway Ministry has given the rail transportation clearance (RTC) for Posco's steel project, proposed to be launched at Paradip in Orissa.

Posco, the Korean steel company, plans to transport 35 million tonnes (mt) of iron ore from Keonjhar area in Orissa, 13 mt of limestone from Satna in Madhya Pradesh and an equal quantity of dolomite from Birmitrapur, also in Orissa, by rail.

The detailed feasibility report on rail transportation for the project is being prepared by Rail India Technical and Economic Services (RITES). However, the report will be in three phases. The first phase, based on Posco's plan to build four-mt capacity, will be ready either by the end of this month or early next month, according to Railways sources. The reports for phases II and III, each of four-mt capacity, will be prepared subsequently.

Mining lease pact

But the problem is that Posco is yet to sign the mining lease agreement with the Orissa Government, and hence the exact mining areas are yet to be identified. Precisely for the same reason, the length of the railway siding in the mining area is yet to be determined.

It is presumed that Posco will get the mining rights in the Keonjhar area, rich in iron ore reserve, and will use the Daitari-Banspani line (155 km) — being constructed by Rail Vikas Nigam Ltd, as well as Haridaspur-Paradip line (82 km) — being built by an SPV, to transport the ore to be mined.

The company will also be required to construct railway sidings, totalling about 40 km, in the mining areas and the plant level on its own. Thus the total length of the railway line needed to facilitate Posco's operation is estimated at about 250 km.

raw materials transport

The rail network for Posco is being planned mainly to transport raw materials to the plant, though the network could also be used to move limited quantities of finished products for the domestic market and slag.

This is because the bulk of the finished products is proposed to be exported.

RITES study is being undertaken with the assumption that Posco will have its own captive port at Paradip, though the port issue — whether there will be a captive port or the existing Paradip port should be used by the Korean firm, has not yet been resolved satisfactorily. A committee is to examine the whole gamut of relevant issues.

The Railways, it might be recalled, issued RTC for Dhamra project, another port project in Orissa, in 1997. However, the project has undergone many changes since then.

With a change in the promoters, the cargo profile of the port too has changed. Dhamra Port Company, a joint venture between Tata Steel and L&T, has to construct 62 km of railway line from Bhadrak — located on the Howrah-Chennai mainline — to the port site on its own. However, the financial closure for the project is yet to take place.

Inquiries further reveal that the Railways is yet to receive any concrete proposal for constructing railway line for the Gopalpur port project (also in Orissa), though it is presumed that about 50 km of railway line may have to be constructed between Chatrapur — located on the Howrah-Chennai main line — and Gopalpur.

The Orissa Government is yet to award the contract to the promoter of the project, it is learnt.

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